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Political donations, public procurement and government efficiency

Author

Listed:
  • Vitezslav Titl
  • Kristof De Witte
  • Benny Geys

Abstract

Firms’ political donations can induce distortions in the allocation of public procurement contracts. In this article, we employ an advanced non-parametric efficiency model to study the public sector (cost) efficiency implications of such distortions. Using a unique dataset covering the Czech regions over the 2007-2014 period, we find that the efficiency of public good provision is lower when a larger share of public procurement contracts is awarded to firms donating to the party in power (‘party donors’). We link this efficiency difference to two underlying mechanisms: i.e. shifts in procurement contract allocations from firms with previous procurement experience to party donors, and the use of less restrictive allocation procedures that benefit party donors.

Suggested Citation

  • Vitezslav Titl & Kristof De Witte & Benny Geys, 2019. "Political donations, public procurement and government efficiency," CESifo Working Paper Series 7591, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_7591
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    More about this item

    Keywords

    political connections; non-parametric efficiency analysis; benefit-of-the-doubt;

    JEL classification:

    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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